Betting on Local Wi-Fi: A Look at ZenReach and LinkNYC

Sometimes, you want to cut the telecom chord and rely on Wi-Fi and Skype. Well — Good luck with that! When you get beyond Starbucks, McDonalds and the public library, Wi-Fi signals can be kind of spotty. Currently, 28 percent of SMBs provide some type of Wi-Fi service, according to Unacast.

Is there a good ad/subscription model to take Wi-Fi to every business location, and even city-wide? And has it changed since 2005-06, when companies like Anchorfree started focusing on ad supported Wi-Fi “wherever people wait”? That’s the challenge that several new providers are taking up. Among them: ZenReach, and Intersection (LinkNYC). Wavespot and Turnstyle are also contenders.

ZenReach has gotten a lot of publicity from its new $30 Million round, which included The Warriors’ Kevin Durant and Ashton Kutscher. The San Francisco-based company is setting up its Wi-Fi service at SMBs around the country. It had previously raised $50 million, and was started by former Milo/eBay Local head Jack Abraham.

The company provides one-stop registration for consumers to let them go from one ZenReach location to another. Its business model relies on a mix of targeted ads and monthly business location subscription fees, which include analytics about customers. Eventually, it may all lead to close the loop transactions.

Here are three questions that we asked about ZenReach when I first wrote about the company upon its launch last July:

3: Will the trade-offs in keeping things simple will position the company for the big “close the loop” O2O payday anticipated from targeting and commerce.

Meanwhile, Intersection, a new ad agency formed by Alphabet (Google) and former NYC Deputy Mayor and Bloomberg exec Dan Doctoroff, is aiming to break free of a reliance on spotty SMB-to-SMB service. It hopes to provide free, city-wide Wi-Fi services around the country.

In New York, its LinkNYC service is being built on 6,500 converted payphone locations – all giving a platform for digital out of home advertising. It also envisions marketplaces at transportation hubs and other key markets.

Whether any of these solutions pan out, each of the contenders have to hope that Wi-Fi remains appealing, given a resurgence of heavily subscribed, unlimited cell plans.

Analyst Tim Farrar, quoted in a Bloomberg article on the unlimited threat to Wi-Fi, thinks that unlimited data will catch on and cut into Wi-Fi’s appeal. Wi-Fi usage at major public venues like stadiums and train stations may go from 50 percent of all mobile data traffic to about one third. At home, almost one third of consumers don’t use a home broadband internet connection because they have an unlimited data plan on their phones, according to a ReportLinker survey cited in the same Bloomberg article.

I think the appeal of the unlimited plans won’t ultimately be that dramatic — people will probably continue to use both, given that Wi-Fi is often available at a greater speed. But it will certainly be hard to persuade the average coffee shop owner to shell out $100+ a month if their customers aren’t asking for it. As for universal, city-wide Wi-Fi , it changes everything because it changes the way that consumers interact with the Web.

This is especially the case in under-penetrated markets – both in the U.S., and abroad. I like a story relayed on Twitter by former Washington Post Digital head Chris Schroeder about a young South African who was raised in a township, but could rarely afford the high data costs beyond some quick access to Facebook and Whatsapp.

When he was brought on a fellowship to Johannesburg, he suddenly had unlimited access to data, noted Schroeder. “He began spending hours on TED Talks and all kinds of places on design — which is his passion. He was literally stunned by it and told me his world was roughly 4 square miles and now his world is ‘the world. I asked him what this meant to him and he said: ‘I was dead before this. Dead. I am completely alive and unlimited now.’”